Agricultural Policies in Europe and the USA

Until this century, the rural sector, with its basis of agricultural activity, has occupied a central point of reference for cultures throughout the world, and in many locations this is still the case. The changes that have affected it throughout the ages have been cause for comment, and often of concern. Its importance has never been denied, and throughout history, measures have been taken, in Europe and elsewhere, to defend the sector.

Ever since the signing of the Treaty of Rome in 1957 the Common Agricultural Policy has been subject to important changes due both to Europe’s relationships with the rest of the world, in particular with the United States of America, and to the difficulties in balancing the interests of the agricultural sectors of the different Member States.

At the end of the Second World War in 1945 economic recovery in Europe was hindered by obstacles which would have proved impossible to overcome if faced by each single state on its own. George Marshall, the American Secretary of State, perceived the need for a wider and more effective approach to the aid which the United States destined to Europe, and drew up the European Recovery Program, a plan which is known in history as the Marshall Plan, inviting European countries to prepare a scheme for the distribution of aid and integration of their economies. A Conference on European Economic Cooperation was called, in which seventeen states took part.¹ This Conference enabled a programme of recovery to be launched, which aimed at a rapid increase in production. The Marshall Plan was successful and permitted the participating countries to reduce their debts with third countries and no longer to depend on American aid. The

After the longest and most heated debate on a farm bill ever known in the history of the United States, President Clinton signed law H.R.2854 on 4 April 1996. This new farm law, formally known as the Federal Agriculture Improvement and Reform Act of 1996, is known colloquially as the Fair Act or as Freedom to Farm.

With the establishment of the European Economic Community and the creation of a common market the need arose for a common accounting parameter for essential formalities, such as drawing up the Community budget, calculating credits and debits and fixing the level of prices for agricultural products.

In 1998 Community expenditure reached almost 84 billion euros. It is expected to rise to 86 billion euros in 1999.

Trade agreements, and, more generally, cooperation with developing countries (LDCs), was seen as an essential element of policy from the very foundation of the European Community. Articles 131 to 136 of the Treaty of Rome provide for the establishment of an Association between the European Community and the Overseas Countries and Territories (OCTs), the former colonies of the founder members.

Article 130A of the Treaty of Rome is that which deals with social and economic cohesion amongst European states. Co-ordination of regional and structural policies within the European Commission is the task of the Directorate General XVI which has responsibility for regional policy and cohesion.

Environmental policy was introduced officially into Community fields of action only in 1986 with the Single European Act. There have been three main stages in its development.

In 1997-98 world production of cereals amounted to 1.89 billion tons, the main producing area being Asia, followed by North and Central America and Europe. The annual average consumption of cereals per head was 173 kg in developed countries and 130 kg in developing countries, according to FAO statistics.

The dairy sector is basic to European agriculture. There are in Europe about a million dairy farms which produce almost 120 million tons of milk and this accounts for about 20 per cent of the gross value of farm output, varying between a maximum of 40 per cent in areas most suitable for livestock to as low as 10 per cent in less suitable areas.

According to FAO, in 1997 world production of meat reached 223 million tons and it has continued to grow at a fairly constant rate.

Over the last twenty years the production of fruit and vegetables has increased rapidly in all continents. FAO data on the production of fruit between 1986 and 1996, estimate an increase of 8 per cent for temperate fruit, 22 per cent for tropical fruit and 21 per cent for nuts.’ Production of citrus fruit, considered separately, has also increased sharply (by 31 per cent) although this follows its own path, distinct from that of fruit in general. The risk of market disturbances due to oversupply is real, but it does not apply uniformly to all varieties of fruit.

The European Union is the leading area in the world for the production of wine, with a share of between 60 and 70 per cent of the total. The wines produced in the Union can be classified into three categories:

In the 1995–96 season world production of sugar amounted to 126 million tons (Table 15.1), the highest level ever reached.’ Of this total amount, 71 per cent was derived from sugar cane and 29 per cent from sugar beet. Ten years earlier, in 1986–87, there had been a more balanced distribution, with 63 per cent coming from sugar cane and 37 per cent from sugar beet.

Over the last half century — and even before that — the rural, and in particular, the agricultural sector in economically advanced countries has been subject to specific regulation which appeared to place it in a privileged category as compared with other economic sectors. The main objectives behind this policy, ably stated for Europe in Article 39 of the Treaty of Rome, were, in short, a guaranteed food supply for consumers at reasonable prices and an equitable level of income for farmers. They are difficult to contest and are likely to be acceptable into the next millennium. But whilst these were paramount in times of scarcity of supply, in times of plenty they take their place alongside wider and more ambitious targets and the means of achieving these new and old ends will inevitably bring changes in the institutional framework within which rural operators work.